Chat with Kenny

Hi SI users,

Hope you have a great weekend so far. Thanks for your questions posted over the past week. I am happy to answer your questions online. I will repost the questions in blue italics followed by my comments in black.

Best rgds,
Kenny the fish

Against The Gods, you wrote:

I notice that,compared to previous result, Qian Hu managed to lower expenses even though the revenue is somewhat flat and that's why there is profit.

Is the number of staff reduced ?

Is there any new plan to improve profit ? New products ?

Hi Against The Gods,

How are you lately?

There was indeed some reduction of staffs in our wholesale business. However, there was also an increase of staffs in our retail business. Hence, although there was a reduction in numbers of employees, the net reduction is not that significant.

We will continue to increase our export of fishes and accessories, produce more dragon fish fries, increase sales from our factory, further enhance its efficiency and turning all retail stores profitable. Currently we have 12 stores in the region.

Regards.
Kenny The Fish

Kevin Lee, you wrote:

Hello. I understand that Qian Hu is in the process of vertical integration.

Could you discuss how this business strategy has panned out so far and what are the main challenges that you foresee in the future?

Also, what are the benefits/drawbacks that you have experienced so far in the process of building your pet fish megastores, compared to your business model in the past?

Hi Kevin,

Thank you for your questions.

I am glad we took the painful decision to vertically integrate our business model. That provides us another two pillars of growth, maybe not now, but definitely in the future. Our retail stores are slowly taking shape and our factory efficiency has slowly improved.

The main challenge for Qian Hu is always about finding enough right people to drive our transformed business. Transformation takes time and time is not what exactly the market will give you. That is quite challenging for any entrepreneur because not all businesses can be build over night.

Building pet chain stores is quite similar to the numerous attempts we made before we listed the company. The difference before we were listed is that we had time to execute our strategies. Once we listed, the market took away this time element and expect results overnight.

Rgds,
Kenny The Fish

Yap HK, you wrote:

Hi, Kenny the Fish,

It seems like QianHu has gone from a big fish into a little fish, hopefully your turnaround is successful by the end of this year.

What is the strategy for QianHu going forward?

Is there anyway to increase your profit margin? It is getting thinner and thinner.

All the best,
Yap HK

Hi Yap,

We may have been relatives 500 years ago.

We always presume we are small fish. I feel that any fish in an ocean is a small fish depending on where you look at it and how you look at it within certain period of time.

The vertical integration is necessary for Qian Hu in order to ensure our group to have multiple source of income in the future. As far as this year is concerned, we are managing our cash instead of growth. Our long term goals have not changed.

1.To be the largest tropical fish exporting company
2. To be the most productive dragon fish breeding company
3. To run one of the best aquarium accessories manufacturing plant in China.
4. To operate retail chain stores in the region

Our margin for this year has slowly improved.

Regards.
Kenny The Fish

Marcus, you wrote

I have 5 questions for you, here goes...

Your business doesn't seem to be growing as fast as it used to. Are there plans to grow the business faster thru M&A or strategic alliances?

Hi Marcus,

How are you?

Our focus this year is a lot more on managing our cashflow than gunning for growth. Furthermore, we require time for our new business divisions to gel and enjoy the economies of scale and efficiency. When that happens, we expect to see significant growth. We have made a big acquisition in Year 2003 and will continue to explore opportunities in this area. We are also continuously seeking strategic alliances whenever there are suitable partners.

Your competitors from China seems to be squeezing your margin with their lower cost structure. How do you intend to fight them?

A: One of the reasons for us to set up a factory in china is to address that concern. Its just that we have not reach the desired efficiency yet.

Your company seems to target the consumer market which command lower margins. Would you consider targeting the corporate market which could up margins by building ponds in their offices & maintaining them so you get more recurring income.

A: We do provide services to maintain ponds and tanks for corporations. The market in Singapore is a bit small and hopefully China can give us a bigger market for that sort of services.

I often see you on television, why don't you tie up with Mediacorp to produce a TV drama program about the QianHu Story. It will strenthen the branding of your company and hopefully increase your bottom line.

A: I often feel bad appearing on TV that often, but the truth is that I have many good friends from the media and I am helping them out when they requested my service. I hope that indirectly, that will bring some awareness to our industry and Qian Hu. Qian Hu's future is not dependant on Singapore domestic market. Our future lies in our overseas market.

The Intergrated Resorts are up & coming in S'pore and around Asia. Is your company bidding to provide fishes for these IR's resorts & maintaining them. They can be quite lubricative.

A: I guess we just have to wait for the details of the IR to come out first in order to assess the opportunities available.

Regards.
Kenny the Fish

Thanks again to all the investors who have posted their questions here. I hope I have answered them to your satisfaction. The next chance for us to correspond again will be the time when we announce our Year End 2005 results early next year. In the meantime, do feel free to visit our corporate website: http://www.qianhu.com/ and our IR website: http://qianhu.listedcompany.com for more information.

Take care and I look forward to our next online Q&A.

Best rgds,
Kenny the fish